Africa’s number of millionaires on the rise

Forbes‘s most recent estimation of billionaires from the continent caps the number at 20, but the continent’s list of high net worth individuals (HNWIs) is much larger. The 2019 Africa Wealth report estimates that there are 140,000 HNWIs (US dollar millionaires) in Africa. And according to several independent sources, that number is set to rise significantly over the next decade.

Growing wealth at the top of the pyramid is not necessarily an indication of Africa’s economic strength. Critics contend that, instead, it is proof of the continent’s pervasive wealth inequality and the growing chasm between extreme wealth and extreme poverty. A boom in African millionaires doesn’t suggest that wealth is being distributed more fairly globally either. Reports estimate that despite accounting for 16 percent of the world’s population, Africa only accounts for 1 percent of the total worldwide wealth.

Still, the luxury sector in Africa generated an estimated $6.1 billion in revenue in 2018, with South Africa, Kenya and Nigeria as the top three contributors, according to the most recent Africa Wealth Report by Johannesburg-based New World Wealth and Mauritius-based AfrAsia Bank. In spite of the continent’s well-documented challenges and emerging market status, the luxury sector is already paying dividends for some — most notably the European brands sold there but also for an elite group of local distributors and retailers.

Experts say that luxury is a challenging sector for Africans to build a fortune. “It’s not the easiest path to accrue large amounts of wealth,” says Bronwyn Williams, trend forecaster at Flux Trends, a business trend company based in South Africa. “A lot of [billionaires] have their roots far back in history; not many are contemporary success stories,” she adds.

Old-Money Retail Dynasties

“[Once] South Africa was not only the retail capital of Africa but one of the retail capitals of the world,” says Chris Bishop, author of “Africa’s Billionaires” by Forbes Africa. The country is home to household names like Shoprite and Woolworths as well as magnates like Raymond Ackerman and Christoffel Wiese who have made fortunes from building giant retail corporations.

Last year, Forbes estimated Wiese’s net worth at $1.1 billion and this year he announced his retirement from the Shoprite supermarket chain which he led. But even before he became “Mr. Shoprite”, Wiese was executive director of Pepkor, a discount clothing chain his parents helped found. Although Pepkor is no longer just a standalone endeavour, in the 2018 fiscal year clothing and general merchandise brought in 66 percent of the parent company Pepkor Holding’s total revenue.

The group’s reach across the continent is impressive. Its Pep stores sell 55 percent of all school wear in South Africa, and distribute fashion merchandise to over 2200 stores including outlets in other African markets like Angola, Malawi, Mozambique, Uganda and Zambia. The retailer has become so ubiquitous in southern Africa that the firm now boldly uses the slogan, “A town is not a town without a Pep”.

One of the brands Pepkor acquired in 1984 was Ackermans, a name that is deeply entrenched in South Africa’s retail history. Founded in 1916 by Gus Ackerman, father to Raymond Ackerman, the company was a value clothing retail chain, a far cry from the failed ostrich feather business that Raymond’s grandfather Meyer Ackerman attempted to start when he arrived in South Africa from Lithuania at the end of the 19th century.

Although it was Raymond Ackerman’s grocery empire Pick n Pay that earned him a spot on the Forbes list of 50 Richest Africans back in 2015 with a reported net worth of $500 million, the Ackerman name is still synonymous with clothing, selling everything from denim to dresses for as low as $10. Today the retail chain counts 700 stores, 80 of which opened in the 2018 financial year.

South Africa’s fashion billionaires are not limited to octogenarians and brick-and-mortar scions. Koos Bekker, who is worth $2.2 billion, made all his money online from ventures like internet group Naspers. Today the billionaire’s reach goes as far as Takealot, one of the country’s largest e-commerce marketplaces selling clothing and other merchandise.

Female Entrepreneurs 

“The African fashion ecosystem favours business people [who already have] money [so they often get] the main [brand] franchises and dabble in fashion. Most of the time, fashion is just another way of investing and branching out to other territories,” says Jamila Halfichi, the Moroccan-born fashion editor of pan-Arab newspaper Asharq Alawsat.

Indeed, many fashion entrepreneurs on the continent have struck it rich in other sectors before deciding to try their luck in the fashion industry, and one popular connector to the industry is family.

Take Patrice Motsepe, a South African mining magnate worth $2.2 billion who was the first black African to join the Forbes billionaires list over a decade ago. But in the fashion industry, it is his wife, Precious Moloi-Motsepe, whose name people recognise instantly. Moloi-Motsepe is the founder of African Fashion International, a full-service fashion agency and the brains behind fashion week events in both Johannesburg and Cape Town.

One business opportunity that is often overlooked even by fashion industry insiders is the apparel after-care sector. Although the bulk of Femi Otedola’s fortune (worth $1.8 billion in 2016 but reportedly on the decline since) comes from his oil ventures, Otedola’s wife, Nana Otedola, founded Garment Care Limited, a popular dry cleaning company in Nigeria. Their youngest daughter, Temi, is now making a name for herself in fashion as a blogger under the initials J.T.O. and has collaborated with Nigerian brands like Orange Culture.

The 13th richest person on the continent on this year’s Forbes list is Aziz Akhannouch who attributes most of his $1.7 billion fortune to his family-owned conglomerate the Akwa Group. But what the listing fails to mention is Aziz’s wife, Salwa Idrissi Akhannouch, CEO and founder of the Aksal Group, a luxury fashion company based in Casablanca, who is one of the wealthiest women in North Africa. From as early as 2001, Salwa has been bringing fashion brands like Gucci and Zara to Morocco’s major cities. She also constructed the Morocco Mall, which is now one of Africa’s largest shopping centres.

From Political Intrigue to Textile Moguls

In Africa, there is often a direct correlation between wealth and politics. Some politicians have been the biggest profiteers of the continent’s resources or have used their power to stop others from accruing wealth.

In Egypt, the family-owned Mansour Group is one of the country’s largest revenue generators. The company started out as Mansour and Sons Cotton in 1952 and quickly became the second-largest cotton exporter in the world. But in 1964, Egypt’s nationalisation of major industries, including cotton, forced the oldest Mansour, Loufty, to flee to Switzerland where he set up a cotton brokerage and instead connected Sudanese cotton traders with international buyers.

Now, the company’s interests have diversified outside of the cotton trade to include automobiles and tobacco. All three of the current generation of the Mansour brothers — Mohamed, Youssef and Yasseen — are billionaires in their own right on this year’s Forbes list.

When political connections end, it can often be fast and abrupt leaving once chummy cronies shut out and in the cold. In Angola, diamond mines have always been a source of political and economic contention. They have also been a source of wealth for Isabel Dos Santos, daughter of the former Angolan president, José Eduardo dos Santos. But when her father’s successor the new president João Lourenço took over, he promised to tackle corruption and family monopolies, and Isabel Dos Santos’s diamond exploration licenses were reportedly revoked last year. She needn’t worry though – Forbes estimates she is still worth £2.2 billion making her the richest woman in Africa.

In addition to the continent’s billionaires, there are over 300 centi-millionaires living in Africa, each with net assets of $100 million or more, according to the most recent Africa Wealth Report. Like their wealthier counterparts, fashion has played a role in the fortunes of many and some started from humble beginnings. Take Tanzania’s GSM Group, whose current president Ghalib Said Mohamed oversees a portfolio of glittering shopping malls, but which began with Mohamed’s ancestor hawking clothes on the streets of the port city of Tanga.

Indeed, from Ato Ketema Kebede’s riches built on acrylic yarn in Ethiopia to Yerim Sow’s Senegalese shopping mall that is home to brands like Adidas and Hugo Boss, fashion has been an important way for more “moderately wealthy” Africans to find success outside the billionaires league.

Despite the continent’s many well-documented challenges for starting a business, the most recent Africa Wealth Report shows that the total private wealth held in Africa is expected to rise by 35 percent over the next 10 years, reaching $3 trillion by 2028. While other industries have reigned supreme in terms of wealth generation, the sizeable list of businessmen and women who found ways to monetise the fashion industry suggests that Africa’s entrepreneurial youth can follow similar paths to fortune.

adopted from Forbes & BoF

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